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Guide to IPOs
This is a general guide for IPO'''ing. As most of the guides I make, this is written as if you understand little about the subject. What is an IPO IPO is an acronym for Initial Public Offering. It's when you make a private or state corporation public. You sell shares (ownership) of your corporation to collect cash. Technically, you are IPOing only the first time you sell the shares of the corporation. Afterwards you are just selling shares. SimCountry players tend to use the term as both the initial offer of shares as well as subsequent offers. So don't be confused. IPOing is a two party process. You offer the shares and somebody else buys them. You can sell as few as 2% or as many as 15% during your IPO. A regular corporation will normally start with 100 million shares. When you own less than 50% of the total corporations shares you can increase your selling of them to 30% at a time. Control of a public corporation will belong to whoever owns the majority of shares. If the country owns the majority of shares, it will be a Country Controlled Public Corporation (CCPC). If a CEO/Enterprise owns a majority of the shares, it is called an Enterprise Controlled Public Corporation (ECPC). If no single player (country or CEO) owns mroe than 24.99% of the corporation, it is called a Truly Public Corporation (TPC). So... '''Private Corporation (Private) = CEO/Enterprise owns 100% of shares. State Corporation/National Corporation (State) = Country owns 100% of shares. Country Controlled Public Corporation (CCPC) = Country owns majority of shares and at least 25%. Enterprise Controlled Public Corporation (ECPC) = CEO/Enterprise owns majority of shares and at least 25%. Truly Public Corporation (Truly) = Controlled by whichever entity owns majority of shares but less than 25% total. Control of a corporation means that the the corporation shows up under that entities corporations list. For a ECPC, the corporation will show up under the list of the Enterprises's corporations (though it will also show up under the countries 'Shares' list), allowing the CEO to make any changes to the corp as if he owned it. Because IPOing is a two party process it requires that you have at least 1 CEO as well or an allied country willing to invest in your corporation with his country's investment fund (sometimes you can get lucky aswell and get an investment from someones investment fund set on automatic or a pension fund) IPO Qulaifications The author is a little fuzzy on this topic. Hopefully others will be able to verify and clarify. In order to IPO, the corporation must meet specific standards. Its Market Value (MV) must be equal to or greater than 600B SC$ and the P/E Ratio must be below 40. The P/E ratio stands for Price Earning ratio this is a measure of the profitability of a corporation by comparing its market value and its profits (dividends). So the higher the market value the more difficult it becomes to maintain a lower P/E in general MV VS Earnings routinely look at corporations above 600 billion to check their P/E ratio and when IPOed ensure that someone buys some shares or it will revert back to state owned with a loss of MV Tips to meeting qualifications faster: 1.) Some types of corps increase in MV faster than others. Experiment with this. (Hint: Oil, Electric, FMU, etc.) 2.) Put max cash (60B SC$) into corps to meet asset qualifications (usually not difficult) . 3.) Reduce Profit Transfer to zero. 4.) Do not retain your products or contract them. Offer 100% on the world market using a good trade strategy. 5) Low salaries can potentially improve profits and P/E Ratio once IPOed a more profitable corp can then support higher salaries Why IPO? You will have to IPO in order to make CCPCs, ECPCs, or Trulies. IPOing is also a way to get past your CEO's limitation of owning 12 Private corps in a single country of your own. If you IPO 100% of the shares to your CEO, it will turn into a Private company after a few game months. Private, and Public companies are usually more profitable than State Corporations. Private, ECPC, and Truly corporations pay resource fees to conduct business in your country. These revenues are generally higher than taxes or profit sharing contributions. This means your cuontry makes more money. If your country owns a percentage of the shares and a (preferably your) CEO owns the controlling amount, the country will receive the resource fee, any taxes, and dividends. CCPCs are just as profitable as CEO owned public corps and can pay just as much money to a country through salaries profit sharing and taxes... they are also a very good option for free players who do not have a CEO while they can potentially be taken over by an enterprise this rarely happens as a mature (Trulie CCPC) Public corp will have a very inflated value and in order to take control of the corporation the enterprise will have to surpass your 25% ownership level (if your smart) making it no longer a trulie and less profitable in the long run Investment Funds Investment Funds (IF) are the bane of the IPOer. Every country has its investment portfolio run (generally automatically) by an IF. The IF purchases shares of corporations to add to this portfolio. It is a way the country makes money, but is mostly insignificant. For IPO purposes, they only get in the way. If you IPO your country during the wrong time of the month or don't finish in time, the IFs might begin purchasing your shares. When this happens, the only way to get them back is to wait and repurchase them when they decide to resell them, or close the corporation and start over. Neither way is efficient. Now, depending on what you want to do, IFs purchasing shares may or may not be a bad thing. If you are trying to make a Truly, your country, and CEOs can only own a max of 24.99% of the shares, so the IFs will get the rest. But, if you are trying to make a 50.01%/49.99% split between your CEO and country to maximize country profits in a public corp, or if you are trying to Privatize the corp (100% CEO ownership), IFs are the devil. There are a couple of ways to avoid IFs. The preferred method is to only IPO between the 16th and 19th of the month. This will give you time to complete the transaction (finish moving all the shares you want". Often, around the 24th or 25th of the month, share processing stops, and soon afterwards, IF processing begins, allowing them to purchase shares you have offered at the time. Also, Share Splits occur after processing (read about them below) which can make the process even more tedious. The second way to avoid IFs is, when offering shares, offer them at 120% the price of what they are worth (default price). This will make them undesirable to the IFs. When Note: IFs cannot countrol a corporation. If an IF owns 90% of a corporations shares and your CEO owns 10%, your CEO will control it. IFs are very useful for a country trying to IPO if you dont want to be reliant on a CEO or dont have a CEO to help you IPO they also make it possible to reach the truly public state which makes the corporations much more profitable then any state or private corp (i suggest the author do more research on public corps as he seems ignorant of the vaubility of a truly public corp VS ECPCs) (CCPCs are pointless without being truly public unless your just tryng to make a quick buck off of selling shares How to IPO This will be a step-by-step guide to walk you through the process. Anything that wasn't explained well above, may be cleared up in this section. This will assume that you are IPOing a country that has 100 million shares (which is the norm). This also assumes you start on the 16th of the month, which is highly recommended. It is also recommended that you use two browsers when IPOing. Log into your country's page using one web browser (ex. Internet Explorer) and your CEO's page using another browser (ex. Google Chrome). In this guide all Country Browser actions will be in bold and CEO browser actions will be italicized. In between each buy and sell step there will be 10 to 15 seconds of processing time before it is recognized. 1.) Open the corporation's page and press the "perform a Public Offering" link. 2.) Always Offer Existing Shares. Replace 2,000,000 with 15,000,000, leave the default offer price as is and press the "Offer My Shares" button. 3.) Go to "Browse World" and enter the country's name of the corporation you want to IPO. 4.) Click on the Corporatinos link and find the corporation. It will be under CCPCs not State corps. 5.) Click on "Shares" link and then the "purchase shares" link. 6.) Type 30,000,000 as the quantity, leave the price as "Market Price" and press the "Buy" button. Within a few seconds your transaction should take place. Your country will sell the 15M to your CEO. That is the first 15% transfer of ownership 7.) From the Shares screen, press the "sell" link. Offer quantity = 15,000,000 at market price. 8.) From the Shares screen, press the buy link. Purchase quantity = 30,000,000 at market price. 9.) Repeat selling actions. Sell 15 million at market price. 10.) Sell 15 million more once last 15M are processed. Once this last transaction processes, your Country (the seller) will own less than 50% of the shares, meanining it can sell 30% at a time rather than 15%. 11.) From the Shares screen, press the buy link. Purchase quantity = 30,000,000 at market price. 12.) From the Shares screen, press the sell link. Offer quantity = 30,000,000 at market price.'' 13.) Purchase quantity of 10,000,000 at market price. '' 14.) '''Sell quantity of 10,000,000 at market price. ' After this processes your CEO will own 100% of the shares. In a few game months the game will recognize this and transform it to a Private Corporation, controlled by the CEO. After some practive you can do this with 5 to 10 corporations at a time. Similar steps can be taken to IPO to ECPC, or CCPC. You will just stop at selling and buying at different times. For ECPCs it is best that your Enterprise own 50.01% of the shares and your country retains 49.99% of the shares. Trulies must be handled differently and may involve two CEOs, IFs, or additional player help. This is a beginners guide and will not delve into Truly corps. Share Splits After a corporation has been IPOed it is vulnerable to Share Splits. The author has also experienced share splits when nationalizing a previously Private corporation. All a share split does is take your original 100 million shares at 10 SC$ (example price) each and turns it into 200 million shares at 5 SC$ each. There is no change in real value. If you owned 100 of those original 100 million shares at 10 SC$ and it split to 200 million shares, you would own 200 shares at 5 SC$. 100*10 = 200*5. The bigger problem is that you will have more shares to buy if you want to own a certain percentage. You will not be able to follow the above step-by-step guide exactly. Instead you will have to use calculations of percentages. The number of outstanding shares is available near the top of the individual corporation's screen. Take that number and multiply it by .15. The product is the max amount you can sell at a time and twice that number is the max your CEO can buy at a time. If the number of outstanding shares is greater than 6.6 Billion, it gets a little more tricky. When buying and selling, you can only have up to 9 digits in the box, meaning, 999,999,999 is the most you can buy or sell at any time. After 6.6 Billion shares, you will have to purchase more than that to stay on the 15% target. So, you will just have to sell and buy 999,999,999 at a time until you are finished. This will take increasingly longer the more shares there are. If there are 24 Billion shares, you better make sure you have plenty of time to sell and buy them before processing begins. You can buy more than 999,999 shares at a time on the share market. If you need to buy 1.96 billion shares, for example, you just put in 1.96B in the purchase box. '''Note: While a share split will initially have no change on market value, in the long run share splits do vastly improve a corporation's value. With a larger number of shares at a lower price per share generally make the shares more appealing to potential investors thereby increasing demand and share prices, so with the market value equal to the total number of shares multiplied by the share price, will lead to an increase in market value far greater than was achievable with the previous number total number of shares. For example: a corporation with a total of 1,000,000 shares at 100 SC$ per share is worth 100Billion where as one with 100,000 shares at 650 SC$ per share (which is generally the price share splits occur) is only worth 65Billion. When used correctly, share splits will stablize the share price when shares have become over priced due to a period of high demand, thereby maintaining high demand, and though not typically employed, share splits can be used to prevent devaluation due to oversupply because by increasing in the total number of shares will require a much larger number of shares to be offered to negitively affect the share price and deter massive selloffs by investors looking to profit from high prices by maintaining a lower more stable price. Category:Simcountry Category:Guides